Europe has 'thrown away' recovery - Gordon Brown
Nicolas Sarkozy and Angela Merkel have used the wrong measures to resolve the eurozone debt crisis and thrown away the chances of recovery, former British prime minister Gordon Brown said today.
Brown said the French president and the German chancellor were exacerbating the financial crisis, which he said was "predictable," in an article in The Independent on Sunday newspaper.
"Deeper economic, social and political agonies will follow as long as the eurozone avoids the big issues," Brown wrote.
Last month's eurozone summit "was yet another European chance of recovery thrown away, a turning point at which history failed to turn.
"And now no number of weekend phonecalls can solve what is a financial, macroeconomic and fiscal crisis rolled into one, which needs a radical restructuring of both Europe's banks and the euro, and will almost certainly require intervention by the G2O and the International Monetary Fund.
"Although Chancellor Merkel and President Sarkozy brokered a July Brussels deal that kept Greece liquid... economic necessity was sacrificed to what was politically expedient."
Three years of "wrong analysis" led to the "wrong conclusions" -- that it was a fiscal crisis in the weaker states, whose profligacy demanded austerity, "and if that fails, even more austerity".
Europe's problems "threaten a tragic roll call" of widespread unemployment and a "wasted decade", Brown wrote.
EU leaders, even now, "find it difficult to understand how the economic policy of the euro area chokes off growth, impedes recovery and leaves Europe ill-equipped for global competition."
Brown, who was Britain's finance minister for a decade under Tony Blair's 1997-2007 premiership, was prime minister for three years until May 2010.
He said one of the reasons he opposed Britain joining the euro currency was that it had "no crisis-prevention or crisis-resolution mechanism and no line of accountability when things went wrong".
Brown wrote that European leaders were "still seeking agreement on funding its first phase long after a second, bigger, phase is overdue", and "remain unsure who is responsible in a crisis".
"Every time the big questions are avoided, and every time the outcome is a patchwork compromise, the next crisis gets ever closer and threatens even more danger," he concluded.
Brown also claimed the US refusal to sanction a new economic stimulus, hike taxes or slash entitlements was "choking off yet another potential engine of world growth".
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Stephen Koludrovic
Aug 7th 2011, 13:08
The euro zone should have only been between France, Germany, Holland, Belgium and Luxembourg. With Denmark, the Czech republic and Austria to follow at a later date. All others should have not been invited to join for quite some time, and Greece definitely never.
Mr Peter Korsten
Aug 7th 2011, 20:29
Of the euro-countries with an AAA rating, only the Netherlands (I wish people would stop calling it 'Holland') and Austria have a very solid rating. France did pretty well during the crisis, but has a rather large public debt (between 80% and 85% of GDP), Germany is not as solid as the Netherlands and Austria. Belgium, let's not even go there. They can't even get a federal government together.
The problem of the euro is not so much the weaker countries, but the fact that there's a monetary union without a fiscal union. And that France wasn't punished, hard, when it broke the rule of not having a deficit for more than three years.
Mr Tony Gatt
Aug 7th 2011, 23:58
The British view has always been that the "One size fits all" theory does not work, especially in the area of bank interest rates.
John Zammit-Spiteri
Aug 9th 2011, 10:09
yes mr expert, and since you are so financially ept, how you would you make good for the continious violent fluctuations against the Maltese Lira, We being so small, and totally dependent on other currencies. If we did as you said , we would have been totally wiped out way back in 2008 , worse than Iceland was. And thanks to the Euro, we are still bobbing and riding the high open seas. And if the worst comes to the worst we are still politically merged with the big ones. And since the big ones have joined us to them we shall survive thanks to the political financial union.Moreover the big ones have enough brains to decide for them including us. While here in Malta many seem to be enjoying the fun, and rubbing ones hands in glee and smiling sick smiles and gushing " I told you so " when in actual fact Those who did politically guide us to join the Euro are counting our blessings that we did.
I shudder to think where we would be today if we did not.
Sometimes I feel that these comments here have no value at all but to let air bagged heads just say something for the sake of it.
Facts are facts and no one can erase reality, Thanks to us joining the Euro , we are safe as long as they are safe, ALONE as we were with the Maltese Lira we would have long gone and overbaord.
Within the Euro till today we are still surfacing, and I am sure we will continue to surface. Those who are praying that we wont, need mental adjusting. This is a time when good ideas are welcome, not sitting and enjoying ourselves while everyone struggles to find best possible solutions.
I think some wonder that with our fabulous malta lira , all the world would be totally bancrupt except we.
I wonder which series of tom and jerry you see!
Mr carlos ellul
Aug 7th 2011, 12:17
Thank god that we've joined the Euro zone
Mr Charles Cremona
Aug 7th 2011, 13:35
You must be a glutton for punishment !